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What: Shares of Myriad Genetics (NASDAQ:MYGN), a molecular diagnostic company, spiked higher by as much as 13% following a ruling by the Supreme Court over the patentability of human genes. The gains were short-lived, though, as shares closed the day down nearly 6%.
So what: Today's Supreme Court ruling was nothing short of confusing if you're a Myriad Genetics shareholder. On one hand, the Supreme Court ruled that genes found naturally in the body cannot be patented. This means that the patents held by Myriad on the BRCA1 and BRCA2 genes, which are often linked to a higher risk for developing breast and ovarian cancer, would not be valid. It could also mean that competition to Myriad's BRACAnalysis molecular test could be on the horizon. Conversely, the Supreme Court did uphold Myriad patents on synthetic genetic material known as complementary DNA. Most of Myriad's patents are based on cDNA.
Now what: There are a lot of huge implications here. First, it means that Myriad may soon face competition for its lead revenue-generating BRCA1 and BRCA2 gene test. It also means that the focus on cDNA is going to increase even more dramatically than it had in the past since the majority of its patents were upheld. Today's ruling likely isn't going to affect Myriad's bottom line in any meaningful way over the next couple of years, but it could change the face of molecular diagnostics and perhaps introduce more competition in the latter half of the decade.
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Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
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